The year 2022 has not been kind to investors. After a great run in the previous year, this year may have served as a wake-up call for many. Nonetheless, as we approach the halfway point of the year, it is appropriate to reflect on how the stock market has performed.
For this piece, we will focus on the Singapore market, and in the other two, we will look at the US and Hong Kong markets separately.
How did Singapore Stocks perform so far?
Overall, the Singapore market performed well in comparison to its peers. The STI ETF (SGX: ES3) has a year-to-date performance of -0.75%, while the S-REIT ETF (SGX: CLR) has a year-to-date performance of -6.47%. In comparison, the Hong Kong Hang Seng ETF returned -4.88%, while the US S&P500 returned -20.19%.
It should be noted that the stated return does not account for dividend yield, and if it were, the STI ETF would have returned +0.8% YTD.
If you look closely at the graph, you will note that all four ETFs are trending downward, which is unsurprising given the rising interest rate environment and inflation, as well as the Ukraine-Russia war and supply chain disruptions. That said, both Singapore ETFs, namely STI ETF (dark blue) and S-REIT ETF (yellow), showed more resilience than the rest as they saw smaller drawdown.
On the other hand, while the Hang Seng Index ETF experienced a higher decline at the outset, it has already regained some of its losses after senior Chinese officials spoke out to assure market stability.
Straits Times Index
As one of Singapore’s market benchmarks, let’s look at the top 5 and bottom 5 performers in the STI ETF.
Top 5 performers
Sembcorp Industry, a player in energy and urban development, is ranked top in the index. This is not surprising, as the company, like Keppel Corp, profits from higher oil prices. Other significant player in the top five is property developers, who have also benefited from rising property prices.
Bottom 5 performers
On the flip side, here are the bottom performers. The first is Yangzijiang Shipbuilding; however, the ‘drop’ in its share price is primarily due to the spin off of its investment segment, Yangzijiang Financial Holding Ltd, which began trading on 28 April 2022. When Yangzijiang Shipbuilding and its Financial Holding are combined, its YTD performance is +0.4%.
Others on the list are primarily REITs, which have struggled in a high-interest environment. The names are Keppel DC Reit, Frasers Logistics & Commercial Trust, and MapleTree Logistics Trust, all of which have previously performed well during the pandemic.
S-REITS
Singapore REITs are another popular choice among dividend investors, so let’s examine how they’ve fared separately.
Top 5 performers
The top five performers had two in the red in 2022, with Suntec REIT posting the highest return of 5.96% inclusive of dividend. According to this ranking, the industry that performed well was Retail and Office REITs, with three of the five REITs operating in Singapore retail malls and/or offices. This can be ascribed to an increase in interest in retail malls and office buildings as Singapore began to relax its Covid 19 restrictions.
Bottom 5 performers
At the bottom of the list is EC World REIT, a China-focused S-REIT that auditors recently flagged due to worries about its capacity to continue operating because a large amount of its loans are due soon. The share price of EC World REIT fell even further after its recent refinancing result was deemed ‘disappointing’ as what RHB has put.
Others on the list include two data center REITs that saw high valuations during the pandemic, both of which have reverted as the number of data centers developed by huge cloud providers for their own needs has increased along with the generally shift of interest among investors.
The other two REITs at the bottom are Prime US REIT, which operates primarily office properties in the United States, and Cromwell REIT, which operates offices, logistics, and industrial facilities throughout Europe.
Top 5 dividend yield
What about the highest dividend yield in the STI ETF?
Ascendas REIT, MapleTree Industrial Trust, YZJ Shipbuilding, MapleTree Integrated Commercial Trust, and MapleTree Logistics Trust are the top five yielding STI ETF components. Interestingly, this makes four of the top five to be REITs.
So let’s now remove these REITs. The list will then include Keppel Corp and three local banks, all of which can be examined further if you are a dividend investor.
5 largest listed Singapore companies
Moving on to the leader board by market capitalisation.
The 5 largest listed Singapore companies are shown, and not surprisingly, the 3 local banks are on this list. Aside from that, SEA, despite a significant decline, remains on second place with a valuation of US$39 billion. Grab, on the other hand, has fallen to the ninth position on the list, with a valuation of US$9 billion.
Closing Statement
All in all, the Singapore market has performed well in comparison to Hong Kong and the United States. However, the market still has winners and losers. For stock pickers who have chosen the bottom few, you may have seen a loss comparable to that of the US and Hong Kong markets, demonstrating the importance of not assuming that just because a market is safer, you would not experience loss.
Additionally, when macroeconomic fundamentals improve, the US and Hong Kong markets may once again outperform Singapore. Of course, when this will occur is anyone’s guess.
